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Business owners: the corporation tax rate may be held. Your overall tax bill may not be.
With the Autumn Budget approaching on 28 October, business owners and directors should be looking beyond the headline corporation tax rate.
The Prime Minister has committed to keeping the main rate at 25%. Companies currently face rates of 19% on small profits up to £50,000 and 25% above £250,000, with marginal relief in between.
Those thresholds can be reduced where companies are associated.
But tax revenue can still be raised through changes to reliefs, allowances and other business taxes.
Five areas deserve attention:
1. Employer National Insurance
Employers generally pay 15% above a £5,000 annual earnings threshold per employee. Eligible businesses can claim up to £10,500 in Employment Allowance.
Additional relief for hiring under-25s is reportedly being considered, but nothing has been confirmed.
2. Dividend taxation
Since April 2026, the basic and higher dividend tax rates have increased by two percentage points to 10.75% and 35.75% respectively.
That matters for directors who extract profits through dividends.
3. Shareholder distributions and restructuring
HMRC's recent consultation could lead to changes affecting share buybacks, demergers and the taxation of company distributions.
These remain proposals, not enacted changes.
4. Business Asset Disposal Relief (BADR)
The BADR rate is now 18%.
A £500,000 qualifying gain could therefore mean approximately £90,000 in Capital Gains Tax, before applicable exemptions and subject to the relevant eligibility conditions.
Reports suggest wider CGT rate increases have been ruled out, but the Budget has yet to confirm the final position.
5. Business rates
A further 20% reduction has been announced from April 2027 for eligible pubs, social clubs and live music venues in England, subject to restrictions.
Wider business rates reform remains on the agenda.
The biggest planning risk may be business exits.
Budget speculation can encourage owners to accelerate a sale before potential tax changes.
But a rushed transaction can cost more than the tax it is intended to save.
The priority should be to understand your exposure, review your options and make commercially sound decisions — not react to headlines.
A corporation tax rate freeze does not necessarily mean tax certainty for business owners.
Which area concerns you most: employment costs, dividends or the taxation of a future exit?
General information only. Not personal tax or financial advice.
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